Mr. Robert Zakresky reports

LEUCROTTA INCREASES LIQUIDS-RICH MONTNEY DEVELOPMENT INVENTORY

As a result of recent land acquisitions and corresponding delineation, Leucrotta Exploration Inc. has increased its Montney development drilling inventory to 160 gross (128 net) drilling locations from the previously disclosed 78 gross (70 net) drilling locations in the highly prolific Lower Montney Turbidite play. The acquired lands are adjacent to the previously announced 13-19 well that tested at a rate of 1,290 barrels of oil equivalent per day. Leucrotta also placed a Lower Montney development well at Doe on stream in December with an IP30 of 890 boepd and production of 780 boepd at the end of the 30-day period.

The Lower Montney Turbidite play is characterized by low drilling costs (less than $4-million to drill and complete), high production rates, high condensate yields and high estimated ultimate recoveries (EUR) that make this particular play one of the most economic in North America. A recent independent report dated Oct. 6, 2015, comparing various areas of the Montney in Alberta and British Columbia notes this particular area as having the highest rates of return of all Montney areas. Leucrotta ran its specific Montney play economics using the report's pricing assumptions (realized prices of oil: $50/barrel, gas: $3.00/gigajoule) and the Leucrotta Lower Montney Turbidite play ranks near the top of the entire report with rates of return of 120 per cent and payback of one year. Using strip pricing as of Jan. 26, 2016, the rate of return is 60 per cent.

Leucrotta has over 170 sections of land in the greater area with the potential to increase the drilling inventory to over 400 net locations from the current drilling inventory of 128 net locations noted above.

Leucrotta owns a 25-million-cubic-foot-per-day sweet gas plant, and has five-year firm transportation and sales gas agreements that will allow the company to initiate a larger-scale development plan. Leucrotta is currently in the planning phase of an expanded development that will include the next phase of drilling and related infrastructure. Leucrotta estimates the planning and regulatory work will take three to six months and is therefore not planning any major capital expenditures prior to third quarter 2016. As a result of this lag, Leucrotta will be able to watch commodity prices and forward curves to refine the timing and pace of the development program.

Leucrotta currently has over $40-million of cash plus approximately $14-million of newly fabricated gas plant equipment for sale. Approximately $7-million of equipment that was previously for sale will now be retained and used in the first development phase.

We seek Safe Harbor.